when the herd comes to a fork

Onlookers, rarely think of a large corporation as though they were following a herd’s instinct. When profits are good their motives seem clear.  But when profits erode, or evaporate, business titans are described by their inability to keep up. Which is too bad really. What is really at issue is their inability to adapt – to new ways of sense making – independently of the herd.

Yogi Berra’s advice is well known. ‘When you reach the fork in the road, take it.’  Simple enough I guess.  In a behavioral sense we just search-and-replace ‘or’ for ‘and’, and presto! We have created the yogi-berra-algorithm for assured success. While this is plain enough for one person to follow, it is not so simple for a group to abide by.

For starters, for every project that we had to conduct before, we now have two. Not very practical when marshalling tens of thousands people – toward one corporate goal – especially if they are changing their behavior independently of one another at will. 

By exploring all paths forever we risk multiplying the work that we do, rather than simplifying it for the better – or rather for the difference that is required of corporate change. Some changes are bigger than others.

We should also recognize that people will likely take sides.  This amounts to choosing between: applying the rules that made old-corp tick, or tackling the work of establishing the rules that will generate the new-corp prosper. Which leads to the polarization of groups. To return to yogi’s metaphor, one group takes the high road, the other takes the low road.

Exercises in change.

I love to read about cases where an executive states publicly that it is time for change. When an executive is using the c-word you can expect the change to be big. Regardless of how often we hear about the need for businesses to adapt and change it remains dizzying, confusing work to structure, prepare for, and implement. 

Find comfort in discomfort

In a 2003 report the Danish Design Center suggested that “design-related employee training” can boost revenues by 40% on average. And since that time we have seen a parade of executive leaders from P&G, GE, Steelcase explaining just how effective this approach has been for them. This new approach doesn’t just graft a best practice from a distant source. It generates better practices by making the most of existing conditions.

How Business Is Adopting Design Thinking.

 

“We warn them that they’ll be uncomfortable,” says Peter Coughlan, who co-leads the transformation practice at design consultancy IDEO. “I tell clients you won’t understand it until you experience it.” Changing a company’s culture can take years, he says, but the quickest route is to get managers to think about themselves as designers of their own organizations, which will help build support at all levels.

The trick, says Cynthia Tripp, marketing director for global design at P&G: “Don’t turn it into an education program. Turn it into a problem-solving machine.” Tripp has worked for the company for 21 years and approaches her own work with the same attitude. “Design education is not what we’ve been doing,” she says. “I am trying to grow the business.”

P&G operates offsite design thinking workshops that bring together employees from across the consumer-products giant, including R&D, market research, and purchasing, to use design methods such as visualization and prototyping to solve real problems for the company. The workshops, run around the world by volunteer employees called facilitators, last anywhere from a half-day to a week.”

Whether I have been a participant in, or observer of a transformation effort, I have come to recognize that the discomfort that Peter Coughlan speaks of in a rather immediate and visceral way. Experience has taught me that there are two cognitive paths that leaders choose between. Are you interested in trying them on for size? Well imagine for an instant that you are the corporate leader that needs to change the direction of a corporate herd (which you presumably work in). Would you:

A – Make design decisions according to new information, and prepare to make decisions with different assumptions. 

or

B – Look for new information to design with, but hold on to the assumptions that helped you succeed so brilliantly in the past.  

You can only reap from what you are ready to assume.

If you are drawn to proposition B, you must believe that positive change will come from making your decisions better.  Where better amounts to collecting new knowledge, to be the judge of.  

Maybe you feel the urgency of change. Maybe you need to make your numbers. Maybe you think that others in your company will choose not to change, if you make trade-offs differently tomorrow, than you do today. In any of these cases change is mostly about matter of finding the right businesses to be in.

What makes proposition B sound so attractive? Well, you have the machinery in place; the structure, the people, the communication channels, and the corporate culture. The only reason your growth is not what you want it to be, is that you don’t own the best properties. In other words boardwalk and park place were already taken. The only change to make in this case is a company-wide memo: “Our mission and vision have changed. Proceed as you were. Good luck with that.”

If on the other hand you were drawn to proposition A, you must believe that most of what you know is probably wrong – in the sense that it is likely out of step with time and out of sync with consumer’s behavior. This will be hard to admit openly. The social costs of making a declaration like this could cost you your position, as the reformed arbiter, sometime before decision-making can ever take effect.

Undeterred, you must also believe that the positive change will come from making decisions differently. You know that innovation will require significant change in the engine room. Your first order of business will be to develop some new ways for recognizing and acting upon insight.  Because having new knowledge isn’t the same thing as knowing what to do about it. You will need some independent ways of thinking about the whole corporation.  

Sounds scary for sure, but if you chose proposition A you are in good company. Einstein was one to argue: “We can’t solve problems by using the same kind of thinking we used when we created them.”

Massive culture change

So when Dave Novak, the chief executive of YUM Brands, (KFC, Taco Bell, Pizza Hut) tells the Economist that his ‘training programme’ will be the “biggest culture-change initiative in the world”. It is because he is planning on affecting all of the firm’s 1.4m workers who are spread over 112 countries.

It is hard not to want to stand up and cheer him on.  

We know from the Danish Design Report (2004 edition) that this scale of capability development is what more companies should declare publicly and invest in when they are making changes. Unfortunately most business leaders prefer to keep this info to themselves. Usually they fear what analysts will say or do. Which is curious I guess given that YUM brands is happy to report 7 consecutive years of + 10% growth.

That’s a whole lot of transformation going on.  But let’s read closer about what he has in mind.

…a couple of years ago he launched a review, both to identify best practice internally and to learn from Yum!’s fiercest rival, McDonald’s.

The exercise turned up three big areas for improvement: selling more healthy items, offering a greater variety of drinks and changing menus according to the time of day. The main obstacle to such ideas was Yum!’s corporate culture, in which different brands and operations in different countries had little to do with one another, slowing the spread of new initiatives.

Massive changes? Yes. Clearly stated? Yes. Clearly planned?  Yes. Reasons to believe that this model will achieve positive sum change in the industry? Not so much. The missing link in ‘the review process’ was the consumer. Just how are people’s behaviors changing?

Does the world benefit when two industry titans pursue the hearts and minds of consumers using the same ideas? Perhaps it will lead to a cost war. Perhaps Dave feels YUM can do what McDonalds do better than McDonalds do now. But the goal of transformation is Innovation: Positive sum. New-to-the-world. Why didn’t I think of that idea.  

To paraphrase Einstein, Innovation means achieving success differently than we are used to. When we use the word better we are dooming talented people to wander down well-worn paths. 

Leaving the herd behind; from best practices to better practices.

It is easy to forget that corporate transformation has entrenched enemy: the generals who won the last war, the people who worked hard build old-corp up to its current stature. Even if that current status – is lame duck.

Competitors can never stand in the way of your transformation. But those who remain loyal to old-corp , those who work alongside you can, and will. Like carbon monoxide, unchecked assumptions have no smell, no taste, and they can’t be seen. But they are toxic to the work of making real changes that last.

A time-honored response to this concern is to hire the outsider. Maybe we hire the outsider for their tacit knowledge. Maybe they have come from our fiercest rival. We hire for their iconic potential to lead us from misery.

With no loyalty to past assumptions we expect them to call bullshit, when they witness it. We expect that they shine light on dark corners of the industry. We expect them to deliver and complete the hail-mary pass; everyone is ready to rush the quarterback… time is running out… so get the ball up and away from the pocket, and you outmaneuver all attempts to block your forward progress. The payoff comes in just one play. The quick win. Momentum takes a turn in your favor. But this short-term relief, doesn’t explain what we do with the rest of our playbook.

In order to succeed at transformation a leader must first define what reinvention will mean. Employees will need to know from leaders: what they should do more of, what they should do differently, and what they should stop doing. The last point seems to be the hardest to identify. It is even harder to live with in practice.

This is because even when we know when something is wrong, we are inclined to use as it, as long as every body else is going to use it as well.

Perhaps we could blame the power dynamic. In work environments we have people to please and status to maintain. In his book Risk, Dan Gardiner argues that we are hardwired to operate this way even when power is not at play. Gardner illustrates what it might have been like to participate in a test at the Institute of Personality Assessment at UC Berkeley, based on the experiments of Richard Crutchfield and Solomon Asch.

“…the questions are simple enough at first. Geometric shapes appear and you are asked to judge, which is larger. At the beginning, you are the first person directed to respond. Then you are the second to answer, which allows you to see the first person’s response before you give yours. Then you move to the number three spot. There’s nothing that takes careful consideration at this point so things move along quickly.

Finally you are the last of the group to answer. A slide appears with five lines on it. Which line is longest? It’s obvious the longest is number four but you have to wait before you can answer. The first person’s answer pops up on your screen: number five. That’s odd, you think. You look at the lines and number four is longer than number five then the second answer appears: number five. And the third answer: number five. And the fourth: number five.  

Now it’s you turn to answer. What will it be?

Clearly everything is wrong. You shouldn’t hesitate to flip the switch [to vote] for number four. And yet there is a good chance that you won’t… 

[Gardner goes on to explain…]

… test subjects abandoned their own judgment and went with the group at least once. Overall, people conformed to an obviously false group consensus one third of the time…

…the group’s opinion isn’t everything; we can buck the trend. But even when the other people involved are strangers, even when we are anonymous, even when dissenting will cost us nothing, we want to agree with the group.”

There is some plenty for change agents to learn from Dan Gardner’s Risk. Additionally, there it leaves unanswered. His scope of inquiry is not applied to corporate change. But this challenge is one that we all will need to overcome regardless if you like proposition A or B.

And then there is this. Gardner asks what is required to become an independent thinker? And whether or not that is practical idea in the most innocuous moments in life. Like whether to vacation on a beach in Mexico, when you know there is a risk of cancer from the exposure to sun.  

“ Clearly today’s fully independent thinker will have to have a thorough knowledge of biology, physics, medicine, chemistry, geology and statistics. He or she will require an enormous amount of free time. Someone who wants to independently decide how risky it is to suntan on a beach, will find that there are thousands of relevant studies. It would take months of reading and consideration, in order to draw a conclusion about this one single risk.”

Groupthink  vs  the network effects of integrated thinking.

Without some measure of conformity companies will never develop a brand that consumers would trust, support and remain loyal to. But conforming to the new takes, practice, methods and a meaningful vision of what we mean by new. 

Rebuilding the railroad

When most people think of design manuals they usually refer to corporate design manuals found in brand management, design pattern libraries found in interaction design and design language guides found in industrial design.  These are prescriptive guides that help to keep the trains running on rails that lead to the next station. That is until someone changes all of the stations.

When we change from old-corp to new-corp all of those bets are off. 

We need to prepare the company with a different type of design manual. Maybe it would be better called an innovation manual. In order to balance independent thinking with a common purpose an innovation practice manual must first make sure that integration is possible.  And that consumers are understood; not simply sold to.

Constraints are not the enemy of change. Tacit practices are. They remain tacit because they are built on unchecked assumptions. Assumptions about what a corporations purpose is. Assumptions about what is risky to execute. Assumptions about how people will value your goods and services. These assumptions have a more familiar name – common sense.

Constraints tell designers when to they are done. This is a good thing. Knowing when to quit is as hard as knowing what to start. Constraints also enable systemic thinking. Even when has yet to be built.

Design the right thing. Design the thing right. But, design the thing last.

anything but smart

What do the following have in common:

smart house, smart car, smart carte, smart pen, smart book, smart mob, smart marriage, smart fm, smart ftp, smart traveller, smart wings, smart wool, smart parts, smart bitches, smart drive, smart sound, smart defrag, smart playlist, smart card, smart spot, smart village, smart board, smart pointer, smart UPS, smart grid, smart tuition, smart lyrics, smart chart, smart boot manager, smart weapons, smart package manager, smart conference, smart clip, smart material, smart dust, smart water, smart cookies, smart power, smart money, smart game, smart heel, smart classrooms, smart skincare, smart garage, smart linux, smart limo, smart motorway, smart pdfcreator, smart mahjongg?

 It can be hard to say precisely, because it depends on what we mean by smart. The trend of prefixing a noun with smart (or easy for that matter) has long ago lost its intended effect. This sample of modified nouns comes from a common google search. And it would not be complete without one more – a gorilla from my industry – the smartphone.

Why should consumers care when we claim to have made something smarter?  What makes one thing smart does not make all things smart. As innovators we must first learn to say what we mean – to people. 

All of these smart-nouns fall into two categories: Those represent the definition of a concept, and others represent an object’s (branded) character. What is the difference you ask? Well, the first bucket is about substance, the second one is about essence.

In order to compare the them, let’s start with essence. A ’smart car’ is not capable of beating Kasparov at chess. It is smart, only in the sense that it makes a promise to the consumer. As in “It makes one feel smart“. Which can be an important emotional connection to make with consumers.   

A smartphone on the other hand, gets its handle because of what it does. At the moment it would not fare much better against Kasparov, but it is so-called smart for two reasons. 1) It’s originators don’t want you to confuse a smartphone with a garden-variety mobile phone, and 2) the concept of computer was already taken.  The value is not in how it makes a consumer feel. The value is in what it does differently for a consumer. 

Which doesn’t mean that smart was the best choice available.

We can all be forgiven for the temptation to smarten things. I mean, what company doesn’t want to make its consuming public feel smart? Additionally, who among of us does not try to do things differently – from our rivals? The problem is just that smart has lost its sweeping powers long ago. Smart-nouns don’t just leave consumers cold, they bury the meaning of an innovation – to collaborators and would-be partners alike. 

Recently, the Economist reported that the mobile phone industry was on a quest to find the soul of the smartphone. This is an unusually of poetic turn, for a newspaper that emphasizes prose and exposition. What is striking to me about this article is that it is a discussion of what a smartphone isn’t. Not about what it is. Nor about what it does.

So the next time you are tempted to apply the smart-noun-smart-bomb, don’t. It is not in your interest. Not to mention your consuming public’s. 

All innovators want to generate excitement. When a concept is first named and defined it is fragile. To define a concept as smart-anything explains little, rather it adds a burden of mystery that you would be expected alleviate. After all, how hard can it be to simply explain: smart at (performing) what?

For example, a smart grid is capable of sensing both supply and demand and is therefore aware.  Such awareness ‘enables the new technology to send pricing messages about when energy conscious customers might best turn on appliances like dishwashers and washing machines’. Such awareness thinly reminds us of intelligence. And yet that awareness isn’t complete enough to recognize when red wine will stain clothing – much less recognize when Kasparov moves a queen in a threatening manner. 

In On Intelligence, Jeff Hawkins argues that intelligence comes down to one thing. The capability to recognize ‘what’s new (here)?’ Societies have made enormous strides with technology. But the next time you think that we have developed sentient-anything, I urge you to configure a new printer on a network – the experience feels anything but smart.

If it is all so comical why does this naming convention persist? And what harm is there in a little robo-fantasy, anyway? To my eyes there are two practices getting conflated: concept definition and branding. The former attends to explaining what some thing is (or will be when it gets made some day) as well as what it meant to do for the user. The latter activity is about explaining how an offering will make you feel, relative to other offerings that exist currently in a market. When we conflate them we probably mean no more harm than to imagine a successful entry to the market. All the same, what some technology enables is very different than how it makes a person feel about the experience. 

More often than not defining new concepts has more to with meaning and nuance about the human condition than performing technological headstands. Mohamad Yunus illustrates how important a clear definition can be:

“At the time that I studied Jobra’s poverty, I realized how important it was to differentiate between the really poor and the marginal farmers. International development programs in rural areas always focus on farmers and landowners, … government bureaucrats and social scientists had not clarified who the poor in fact were….Such conceptual vagueness greatly damaged our our efforts to alleviate poverty. For one thing, most definitions left out women and children. In my work i foud it useful to use three braod definitions of poor to describe the situation in Bangladesh:

P1.  The bottom 20 percent of teh population (hard core / absolute poor)
P2.  The bottom 35 percent of the population
p3.  The bottom 50 percent of the popilation

Within each category of poor I have often created sub classifications on the basis of region, occupation, religion, ethnic background sex, age and so on. Occupational or regional categories may not be as quantifiable as income asset criteria, but they help us to create a multidimensional poverty matrix.  Like navigation markings in in unknown waters, definitions of poverty need to be distinctive and unambiguous. A definition that is not precise may be as bad as no definition at all… these people had absolutely no chance of improving their economic base. each one was stuck in poverty.”

when is a fundamental change needed?

According to authors: Johnson, Christensen, and Hagerman, in the December 2008 copy of the Harvard Business Review, maintaining a thriving business is different than simply maintaining the business that you are in. The hard part they say, is getting back to fundamentals – and not letting prior fundamentals stand in your way.

A survey conducted by the Economist (and independently confirmed by IBM) indicates that about half of all CEOs report a need to adapt their business models. Additionally two thirds of them feel that extensive changes are needed.

What they are less certain about – and would be more informative – is the percentage of middle and senior managers who feel the same way. How many for instance, feel that business model innovation is their work to perform?  (or feel that it is their work to guard against?) In any case, the prevailing gales of creative destruction have executives and managers alike battening down the hatches for “permanent shifts in their market landscapes”.

In the The Stuff of Thought, Steven Pinker explains how language can inadvertently limit our imagination. Which partly explains why it is hard to get back to fundamentals. Many people in your company might plainly agree on being led by the customer, giving voice to the customer, and or being human centered, but how easy is it to align with the strange perspective of another?

Senior managers at incumbent companies thus confront a frustrating question: Why is it so difficult to pull off the new growth that business model innovation can bring? Our research suggests two problems. The first is a lack of definition: Very little formal study has been done into the dynamics and processes of business model development. Second, few companies understand their existing business model well enough—the premise behind its development, its natural interdependencies, and its strengths and limitations. So they don’t know when they can leverage their core business and when success requires a new business model.

Like Steven Pinker, authors Johnson, Christensen and Hagerman, think that part of the problem is semantic. i.e. Few people share a common, serviceable definition. But the second reason they claim, is that few companies understand their business model well enough in the first place. Not knowing the detailed analysis, makes it hard to notice vulnerabilities. Moreover, it can also mask when a new one is needed to keep the company vital.

Curiously they claim that you don’t begin the work of business model innovation by thinking about the business model at all. In stead “It starts with thinking about the opportunity to satisfy a real customer who needs a job done.”

They elaborate that a business model is made of four interdependent parts:

1)   The Customer Value Proposition, 2)   The Profit Formula, 3)   Key Resources, 4)   Key Processes.  

The article takes one into great detail about how the ‘true’ meaning of these terms. And the observation that “often this [work] begins with a very simple realization” about what your end-customers are doing. Disruptive innovations aren’t inherently radical (as in, “wow that is such a crazy idea that you have!”) they are radical to our engrained ways of thinking about customers, our industry, our rivals and the company we work for. In other words disruptive innovation isn’t just a game changing maneuver that applies to rivals – this kind of innovation is disruptive at home. 

All of which comes back to cultural norms and metrics – within the corporate – that limits imaginations, and obscures the emergence of that “very simple realization”. Long after a company develops an effective theory of business, it’s fundamentals are decomposed into practices, norms and metrics. It is the fundamentals of the incumbent order, that will continually find fault with propositions of the new.

Financial

gross margins, opportunity size, unit pricing, unit margin, time to breakeven, Net present value calculations, fixed cost investment, credit items.

Operational

end-product quality, supplier quality, owned versus outsourced, customer service, channels, lead times, throughput.

Other

pricing, performance-demands, product development life cycles, basis for individual rewards and incentives, brand parameters

read more here Reinventing Your Business Model – HBR.org .

similar yet vexingly different – design and innovation

What do the following items add up to: 1) the loss of a chief visual designer, 2) the prototype launch of an all knowing answer-engine, and 3) the talk of an antitrust investigation? Answer: a difficult week, for Google

Google is in the news so much that they usually escape notice. But now it’s different somehow. It’s as though journalists are actively to trying to prepare us a world after Google.

Miguel Heft, of the New York Times, suggests there is some trouble in the magic kingdom (a chief visual designer moves on – to Twitter). But he seems more concerned to know if engineers are blinded by data? He also asks, if companies are in danger, when they fail to recognize what designers have to contribute. 

“…Google is unapologetic about its approach.“We let the math and the data govern how things look and feel,” Marissa Mayer, the company’s vice president of search products and user experience, said….”

“CAN a company blunt its innovation edge if it listens to its customers too closely? Can its products become dull if they are tailored to match exactly what users say they want?”  Read the whole article>>

Henry Ford might have answered his question this way: ‘if I asked the people what they wanted, they would have asked for faster horses’. 

A century later, does our always-on, increasingly networked, and ever-measured, world, make Heft’s question any more difficult to answer? Not really. And it doesn’t excuse Miguel from blurring the boundaries between design and innovation.  Doing so isn’t much help to either cause.

Heft would like us to make a choice: innovation, or customer delight? Which side are you on? A sort of one-two punch sets the article in motion, and succeeds in making it hard to see what ideas are lurking off to the side.

For argument’s sake, let’s just say that when Google is trying to decide which – one of 56 – shades of blue to use that is a design decision. And when it is trying to assess if wolfram alpha is a Google-killer or not, well that is an innovation decision. Your first clue is that no one around you knows just what a wolfram alpha is yet.

If the flight of a brilliant designer was big news, then news of wolfram alpha seemed bigger. Steven Wolfram lifted the lid on his fantastic computing machine, an answer engine, to a small group of well-placed users over the weekend. While he denies any aims to be making a Google-killer who wouldn’t be flattered by the comparison. Have answers become the new search? Here is what Nova Spivek had to say:

“It’s not a “Google killer, it does something different. It’s an “answer engine” rather than a search engine”.

But how different? And what difference would that make in the everyday lives of people who google? One hands-on reviewer, TEDchris, posted this thought experiment on his blog:

“…The much-hyped new computational engine Wolfram Alpha soft-launched last night. It’s been dubbed by some a Google-killer… so, just for fun, I ponied up a few questions to compare the two, trying to focus on the types of specific queries that Wolfram Alpha is designed to excel at.” Read more:  - http://tedchris.posterous.com/wolfram-alpha-vs-google-1#ixzz0Fq9VivRO&A

As well as this conclusion.

I’m sure it will find a powerful niche.  But even in its target area of specific answers to data-based questions, a lot of people will be Googling for a while yet.

As fascinated as users are with its strengths, they are quick to grant the incumbent an easy win. But back to Heft’s Question. Can a company do the wrong thing by listening [quite literally] to its customers? Certainly. Especially when the customer tries harder than it should to help you out. TEDchris’ experiment is an object lesson in how not to learn from people who use what you have to sell.

Looking closely at the experiment above, we see that TEDchris gins up seven questions for the wolfram alpha that is intended to help show it off.  He follows this with a bake-off; entering those very questions into Google as a control measure. Meaning, that if the differences between the ‘answer’ paradigm, and the ‘search paradigm are breathtaking, then wolfram alpha scores the ribbon.  If not, then Google remains champ. The design of his experiment indicate that, TEDchris knows just a little too much about the technology. Would-be innovators must learn to see past this common illusion.

This is where Debra Dunne and John Seely-Brown have an argument. Or, as Henry Ford might say, if it is innovation you’re after, it isn’t about making faster horses. In other words, the promise of a new paradigm is not aptly measured by the standards of the incumbent.

Seeing around corners requires a deep understanding of what people do and believe. Neither the incumbent nor the new entrant will earn a significant new following from random acts of design – classically trained or not.  And while inventive technology is vital to innovation. It just happens to have a history of misleading its creators.  Recall for a minute the breathless talk of the Segway Transporter. Exciting yes. Adopted by millions? Not so much.

Debra Dunne and John Seely-Brown encourage would be innovators to focus on observing pain points. Something, they argue that Google’s micro tuning ways with data might never show.  Good. But, what about knowing peoples simple pleasures? Or better yet, the activities they are otherwise get engaged in (when they are inclined to search)?

If an answer engine is the answer to the question of what’s next, then TEDchris would have been better off performing a different experiment. I would encourage him and others to get up from the laptop, and live a little.

Had he captured seven genuine situations (from personal experience) over the course of a day or two, he would have notices different types of uncertainty he were featured in his experiment. And he would have known the consequences of each. Because we no longer pay much attention to tasks like, commuting, tying our shoelaces, and using a search engine, much of our everyday life is hiding in plain sight.

Had he found a simple way to face up to these experiences, then his questions for wolfram alpha would be different.  More importantly his insights about an answer engine, would have included ideas about where people might need and want to access to better answers.

jack and suzy’s bad week

It is hard to imagine what could keep Jack Welch down for a whole week, but he, and Suzy, list a series of events that conspired to do just that. Not that it was bad for them so much; it was really just a bad week for business on the whole.

The diamond in the rough in this opinion piece, was the term “decision shopping“. Here it is in its original context:

The second worrisome event occurred in North Carolina on Apr. 29, when Bank of America shareholders, galvanized in part by strong union advocacy, voted CEO Ken Lewis out of his post as chairman. What’s so bad about that, you wonder? Nothing—in terms of shareholder voice. We’re all for that. But ultimately, we don’t support the splitting of the two top executive roles because it can encourage dysfunctional, productivity-sapping “decision shopping,” wherein managers go to the leader who’s most likely to support their initiatives. The split roles also tend to cut into something companies desperately need today: clarity. When there are two bosses, you can often get two messages, and that’s too bad.

When “two top executive roles [are split] it can encourage dysfunctional, productivity-sapping “decision shopping,” wherein managers go to the leader who’s most likely to support their initiatives.”

Normally this seems like one area where the creation of a free-er market for ‘initiatives’, would sound like Jack’s kind of capitalism. But judging from his essay, he strongly believes that this is one place where, regulation should triumph over freedom.

via Specter, Bank of America, Chrysler: A Bad Week for Business – BusinessWeek.

how davids beat goliaths: substitute effort for ability

This recent essay by Malcolm Gladwell, for the New Yorker, looks at the surprising rise of a junior girls basketball team to national prominence, and finds lessons about innovation in their experiences and in the strategies of Lawrence of Arabia.

Gladwell examines a coach’s unorthodox use of the full-court press – unorthodox that is in a game played by 12 yr old girls – as a great leveler. Suddenly and convincingly, David is the new boss, of Goliath. By out-maneuvering taller and more talented opponents – at two deadlines - they are able to overcome social conventions of the game and disrupt the balance of power.

Because he grew up in India – and is perfectly alien to basketball - coach Vivek Ranadivé must first have the curiosity to make this observation (before he can innovate):

“He would never forget the first time he saw a basketball game. He thought it was mindless. Team A would score and then immediately retreat to its own end of the court. Team B would inbound the ball and dribble it into Team A’s end, where Team A was patiently waiting. Then the process would reverse itself. A basketball court was ninety-four feet long. But most of the time a team defended only about twenty-four feet of that, conceding the other seventy feet. Occasionally, teams would play a full-court press—that is, they would contest their opponent’s attempt to advance the ball up the court. But they would do it for only a few minutes at a time. It was as if there were a kind of conspiracy in the basketball world about the way the game ought to be played, and Ranadivé thought that that conspiracy had the effect of widening the gap between good teams and weak teams. Good teams, after all, had players who were tall and could dribble and shoot well; they could crisply execute their carefully prepared plays in their opponent’s end. Why, then, did weak teams play in a way that made it easy for good teams to do the very things that made them so good?”

And so with this change of perspective Coach Ranadivé decides to operate according to two principles:

1) Speak calmly and softly, and convince the girls of the wisdom of his approach with appeals to reason and common sense.

2) Play all 94′ of the court. Play it all game.

Gladwell devotes most of his energy and analysis to the latter principle, to the exclusion of the first one’s significance in underwriting his team’s success. But we notice later on the story how quickly a team can collapse when an opponent’s coach start’s yelling at his disoriented team.

Gladwell introduces the thinking of Ivan Arreguín-Toft to support his analysis, which is how we get from 12 yr old blond girls, to bedouins fighting in the desert.

Davids win all the time. The political scientist Ivan Arreguín-Toft recently looked at every war fought in the past two hundred years between strong and weak combatants. The Goliaths, he found, won in 71.5 per cent of the cases. That is a remarkable fact. Arreguín-Toft was analyzing conflicts in which one side was at least ten times as powerful—in terms of armed might and population—as its opponent, and even in those lopsided contests the underdog won almost a third of the time…

…What happened, Arreguín-Toft wondered, when the underdogs likewise acknowledged their weakness and chose an unconventional strategy? He went back and re-analyzed his data. In those cases, David’s winning percentage went from 28.5 to 63.6. When underdogs choose not to play by Goliath’s rules, they win [!]

Shifting my odds from 1 in 3, to 2 in 3, ammounts to 100% return on innovation. And all from the application of an unconventional strategy. This raises curious and troubling questions for david’s and goliaths alike, especially when their instincts lead them to garden-variety strategies.

“…The eighteenth-century general Maurice de Saxe famously said that the art of war was about legs, not arms…”

Maybe their is something more to the metaphors that de Saxe uses in this re-framing? Perhaps corporations that can cover more ground, than lift more weight, will become the new goliaths of the future?

bob nardelli’s haircut

Businessweek, takes a look at some disturbing patterns of behavior by Chrysler’s CEO. Nardelli, came up through the ranks of GE under Jack Welch, and is regarded as a management genius. But his record at the Home Depot – and now Chrysler – are beginning to display a dismal pattern.

When Cerebrus Capital chose to make Chrysler private again, their choice of Nardelli for CEO raised eyebrows. But people were excited to by the promise of an outsider CEO in Detroit. They sensed in him the chance to demonstrate a true corporate transformation, which by now was decades overdue. Nardelli, unlike a Detroit-man, was ’someone who was ready to make difficult decisions’. And someone not limited by various myopia that were common in the auto sector.

The simplest lesson is: to stop recruiting for the cult of personality, but to recruit a whole team; that is capable of generating a sound transformation plan.

In the context of shrinking economies around the globe, let’s say that every company in business today faces the same pressure: spend less than you make. Witness the daily reports of job reductions. 

Managers are faced with balancing irreconcilable forces: 1) the harsh reality of shrinking economies, 2) the surge toward expansive planning. What has made the second option seem so natural over the past several decades, were a sequence of economic bubbles that lead managers to overconfidence. And, when improbable bets paid off, (or at least didn’t fail punitively) there was always more cash on hand for the next acquisition – with little question from corporate boards-of-directors. But, now that few businesses can expect that their industry will grow in the next 4 quarters, managers feel disoriented and unstable.

A common watchword these days is pragmatism. Where pragmatic is code for: ‘lowering our levels of competitiveness. And doing more of what we know how to do’. Which sounds like myopia being made fashionable. However, pragmatic means: being matter-of-fact. So, I would presume this should include dealing with unpleasant matters-of-fact. Detroit and Wall Street aren’t the only ones watching their industries ‘get a haircut’. Take a look at newspapers, magazines, and the advertising industry.  They too, are dealing with difficult matters indeed.  Yet for all of their anxiety, it appears that any instinct for entrepreneurship has dropped out of the zeitgiest in business.

It is the fundamental changes that hide – so readily – in plain sight.

…Nardelli’s cuts haven’t always served strategic ends. At Home Depot, he replaced many veteran hardware guys and retired tradesmen with twentysomethings making less money. The cuts gave profits a short-term pop, but lackluster service drove away loyal customers.

At Chrysler, Nardelli cut costs partly by robbing from tomorrow. Car companies are nowhere if they don’t have new products in the pipeline. But he cut capital spending for new models from more than $3 billion in 2007 to $2.3 billion for the next two years. When the feds showed up to assess Chrysler’s viability, they noted that Nardelli’s team planned only four new models for the next five years…

…One of the great ironies of Nardelli’s tenure is that though he billed himself as the plucky outsider waging war on Detroit myopia, his strategy differed only in degree from what the car guys have been doing for years: restructuring. Like his predecessors, he wasn’t able to wring concessions from the unions fast enough. Instead, he saved money by paring white-collar ranks. His legacy is a Chrysler so hollowed out it may no longer be viable as a standalone company.

The Nardelli effect can be felt everywhere right now. And if other executives and managers like him are ‘robbing from tomorrow’, then a true recovery will take longer than analysts are projecting. The only problem with essays like this one, is their tendancy to leave readers with the impression that this was simply one person’s folly. Companies and their analysts are quick to find a scapegoat. We simply clean the desks of the offender and escort them to the lobby.

For all that, we have a difficult time holding a management team to account. Mostly because we still accept the idea that a single leader is responsible for success. The lone genius rides again … he is robbing from the future. 

for more  Bob Nardelli’s Bumpy Road – BusinessWeek.

the entrepreneur and the juvenile delinquent

This discussion about entrepreneurship (and intrapreneurship) lays out, what is purportedly, the original definition: “[A] shift[ing of] economic resources out of an area of lower and into an area of higher productivity and greater yield.” 

Jean-Baptiste Say, a French economist who first coined the word entrepreneur in about 1800, said: “The entrepreneur shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.” One dictionary says an entrepreneur is “one who undertakes an enterprise, especially a contractor acting as the intermediary between capital and labour”…  

… they are also opportunistic, sometimes ruthless to a fault. Abraham Zaleznik, a Harvard Business School professor, once said, “I think if we want to understand the entrepreneur, we should look and the juvenile delinquent”… 

It is refreshingly plain spoken. But why is it that the innovator’s mindset is associated with delinquent behaviour? Maybe there is something about this idea, that genuinely forces the analogy.

Who knows, just maybe the two remain impossible to distinguish? 

via Management idea: Entrepreneurship | Entrepreneurship | The Economist.

keeping an eye on ‘the decider’

It takes a certain heresy to suggest that smart leaders make bad decisions, and that weak ones get lucky for that matter.

But, regardless of the scale of a decision, we can all reflect on moments when we ourselves have failed to live up to our own intelligence, or in the cases when we have outdone it.

In this HBR article “When good leaders make bad decisions”, Andrew Campbell, Jo Whitehead, and Sydney Finkelstein, explain their study into 83 large scale (corporate) blunders. They identify two factors that could explain why we, our colleagues, and our leaders trip up. Even in those cases when ‘the decider‘ feels most certain. 

In short, they prescribe some adult supervision, and some emotional distance…

…All these executives were highly qualified for their jobs, and yet they made decisions that soon seemed clearly wrong. Why? And more important, how can we avoid making similar mistakes? This is the topic we’ve been exploring for the past four years, and the journey has taken us deep into a field called decision neuroscience. …

How the Brain Trips Up

We depend primarily on two hardwired processes for decision making. Our brains assess what’s going on using pattern recognition, and we react to that information—or ignore it—because of emotional tags that are stored in our memories. Both of these processes are normally reliable; they are part of our evolutionary advantage. But in certain circumstances, both can let us down.

This assumes that good leaders actually do perform decision making, when it is required of them. What gets overlooked with this framework is the frequency with which, decisions get deferred, or never made at all. 

for more:  Why Good Leaders Make Bad Decisions – HBR.org .

from david brooks; “we construct ourselves through our behavior”

For well over a century now, innovation is thought to have been the work of the lone – and often lonely – genius. While true in all fields of endeavour, this seems especially true in business circles. And even as we, who do the work of innovation (in business), find that the world is tipping: from the management of all things – to the innovation of all things. Business leaders are strangely attracted to, and operate within, this idea, this myth, which persistently trips up their sincere efforts to build a common sense, and to establish frameworks for plain dealing.

Why do we persist with the caricature, of say Thomas Edison as the solitary inventor? Especially, when we know that he hired a crew of nearly a hundred inventors, housed them in a sweatshop, and then claimed much of their intellectual property – as his own.

David Brooks argues that our misplaced faith, will be ‘pierced‘ by much of the knowledge contained in these two books:

1) The Talent Code  by Daniel Coyle, and
2) Talent Is Overrated by Geoff Colvin.

When I taught Industrial Design, the single idea that I spent most of my time preaching (and practicing) is neatly summarized here, by Brooks: 

“What Mozart had, we now believe, was the same thing Tiger Woods had — the ability to focus for long periods of time and a father intent on improving his skills. Mozart played a lot of piano at a very young age, so he got his 10,000 hours of practice in early and then he built from there.

The latest research suggests a more prosaic, democratic, even puritanical view of the world. The key factor separating geniuses from the merely accomplished is not a divine spark. It’s not I.Q., a generally bad predictor of success, even in realms like chess. Instead, it’s deliberate practice. Top performers spend more hours (many more hours) rigorously practicing their craft.”

In summary, Brooks argues that genetics are no match for deliberate and tireless practice – and tutelage. 

Yet, my eyes are drawn to his the use of the word democratic. Mostly, because this particular frontier of design thinking interests me in general. And curiously because, the archetype Brooks uses to illustrate his point is widely known as the very model of individual genius. Tiger Woods is no team player.

What are the factors involved in managing a team that is capable of genius? Say, more in the model of coaching Gretzky, Messier, and Kurri back in the day. Not as solo performers, but as components of an integrated and interdependent whole. We need to arrive at a model (of practice and tutelage) that reliably build a more athletic innovation team.  Knowing from experience that they tend to be made of out of disparate parts; each one working from different logics. 

Perhaps Colyle and Colvin have more to say on the topic? I look forward to reading their works soon. Many of their sources like Bloom, Krathwohl and Kolb are familiar to me, yet I look forward to finding insights to how we might construct a corporate self through common behaviors.

 

via Op-Ed Columnist – Genius – The Modern View – NYTimes.com.The Talent Code